Edgar Filing: JAPAN SMALLER CAPITALIZATION FUND INC

Portfolio Securities and foreign currency holdings were translated at the

following exchange rate as of November 30, 2014

Japanese Yen:

efc15-91_fmnq.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-05992

JAPAN SMALLER CAPITALIZATION FUND, INC.

(Exact name of registrant as specified in charter)

Worldwide Plaza

309 West 49th Street

New York, New York 10019

(Address of principal executive offices)

Yutaka Itabashi

Worldwide Plaza

309 West 49th Street

New York, New York 10019

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 833-0018

Date of fiscal year end: February 28, 2015

Date of reporting period: September 1, 2014 - November 30, 2014

Item 1. Schedule of Investments

JAPAN SMALLER CAPITALIZATION FUND, INC.

SCHEDULE OF INVESTMENTS

November 30, 2014

										% of
					Market		Unrealized			Net
	Shares		Cost		Value		Gain or Loss			Assets

JAPANESE EQUITY SECURITIES

Banks
Akita Bank, Ltd.*		1,379,000	$	3,732,084	$	3,903,487	$	171,403			1.3
General banking services
The Kagoshima Bank, Ltd.		785,000		5,316,439		5,012,890		(303,549	)		1.7
General banking services
The Yamanashi Chuo Bank, Ltd.		1,293,000		5,685,552		5,392,039		(293,513	)		1.8
Commercial banking services
Total Banks				14,734,075		14,308,416		(425,659	)		4.8

Chemicals
Sakai Chemical Industry Co., Ltd.*		2,629,000		7,961,881		8,128,416		166,535			2.8
Titanium oxide, polyvinyl chloride stabilizers, and pharmaceuticals
Tenma Corporation		231,500		2,968,022		3,077,565		109,543			1.1
Molded resin products
Total Chemicals				10,929,903		11,205,981		276,078			3.9

Construction
Toenec Corporation		1,687,000		9,411,087		8,243,134		(1,167,953	)		2.8
Constructs comprehensive building facilities
Total Construction				9,411,087		8,243,134		(1,167,953	)		2.8

Electric Appliances
Espec Corp		311,600		2,346,034		3,000,495		654,461			1.0
Meteorological testing devices
Kitagawa Industries Co., Ltd.		336,900		3,544,662		3,221,411		(323,251	)		1.1
Industrial fasteners and electromagnetic wave resistant parts
Koito Manufacturing Co., Ltd.		116,700		2,248,312		3,662,237		1,413,925			1.3
Lighting equipment
Nichicon Corporation		674,200		5,382,142		5,446,991		64,849			1.9
Manufacture and sale of capacitors and transformers
Total Electric Appliances				13,521,150		15,331,134		1,809,984			5.3

Financing Business
Ricoh Leasing Company, Ltd.		133,600		3,519,104		3,506,015		(13,089	)		1.2
Office automation equipment leasing
Total Financing Business				3,519,104		3,506,015		(13,089	)		1.2

Food
Fuji Oil Co., Ltd.		286,400		4,916,140		4,072,816		(843,324	)		1.4
Palm oil and coconut oil
Total Food				4,916,140		4,072,816		(843,324	)		1.4

Glass and Ceramics Products
Nichiha Corporation		342,200		3,543,216		3,081,818		(461,398	)		1.1
Ceramic exterior walls and other construction materials
Total Glass and Ceramics Products				3,543,216		3,081,818		(461,398	)		1.1

Information and Communication
Okinawa Cellular Telephone Company		129,000		3,261,707		3,667,860		406,153			1.3
Cellular and car phone services
Total Information and Communication				3,261,707		3,667,860		406,153			1.3

Iron and Steel
Nichia Steel Works, Ltd.*		1,581,000		5,051,795		4,461,963		(589,832	)		1.5
Produces and sells steel products
Osaka Steel Co., Ltd.		283,300		5,146,049		4,935,673		(210,376	)		1.7
Electric furnace steelmaker
Total Iron and Steel				10,197,844		9,397,636		(800,208	)		3.2

Machinery
Hisaka Works, Ltd.		517,300		4,923,565		4,201,156		(722,409	)		1.4
Heat exchangers and evaporators
Oiles Corporation		164,880		3,079,085		2,818,378		(260,707	)		1.0
Manufactures oilless bearings
Sintokogio, Ltd.		564,500		4,296,438		3,875,885		(420,553	)		1.3
Engineering equipment
Total Machinery				12,299,088		10,895,419		(1,403,669	)		3.7

Metal Products
Neturen Co., Ltd.		499,500		3,336,568		3,387,511		50,943			1.2
Induction hardening equipment
NHK Spring Co., Ltd.		344,500		3,290,859		2,983,538		(307,321	)		1.0
Automobile-related products
Piolax, Inc.		83,700		2,565,879		3,448,130		882,251			1.2
Production and sale of automobile parts
Total Metal Products				9,193,306		9,819,179		625,873			3.4

% of

Market

Unrealized

Net

Cost

Value

Gain or Loss

Assets

Other Products
Fuji Seal International, Inc.	105,800	$	3,135,824	$	2,999,301	$	(136,523	)	1.0
Packaging-related materials and machinery
Nishikawa Rubber Company Ltd.	231,100		3,855,230		3,617,387		(237,843	)	1.2
Rubber products
Total Other Products			6,991,054		6,616,688		(374,366	)	2.2

Pharmaceutical
KYORIN Holdings, Inc.	145,200		3,108,232		2,825,712		(282,520	)	1.0
Pharmaceuticals manufacturer
Total Pharmaceutical			3,108,232		2,825,712		(282,520	)	1.0

Real Estate
Keihanshin Building Co., Ltd.	921,700		5,148,503		4,954,040		(194,463	)	1.7
Real estate leasing and building management
Total Real Estate			5,148,503		4,954,040		(194,463	)	1.7

Retail Trade
Arc Land Sakamoto Co., Ltd.	155,700		2,631,044		3,211,067		580,023		1.1
Operates home centers
Create S D Co., Ltd.	146,200		5,076,604		4,760,430		(316,174	)	1.6
Drug store chain
Daikokutenbussan Co., Ltd.	134,100		3,700,655		3,891,950		191,295		1.3
Operates discount stores for food products and sundry goods
Hiday Hidaka Corp	96,980		1,801,731		3,137,348		1,335,617		1.1
Chinese restaurant chain
Jin Co., Ltd.	131,900		4,202,203		3,061,369		(1,140,834	)	1.0
Eyeglasses and fashion merchandise
San-A Co., Ltd.	96,000		2,522,853		3,259,309		736,456		1.1
Housing related goods and groceries
Total Retail Trade			19,935,090		21,321,473		1,386,383		7.2

Textiles and Apparel
Hogy Medical Co., Ltd.	84,500		4,001,350		4,079,065		77,715		1.4
Medical supply products
Total Textiles and Apparel			4,001,350		4,079,065		77,715		1.4

Transportation and Warehousing
Alps Logistics Co., Ltd.	268,100		2,777,721		2,821,035		43,314		1.0
Delivery, storage, and forwarding of electronic components
Japan Transcity Corporation	1,483,000		5,076,938		4,660,143		(416,795	)	1.6
Warehousing and transportation services
Meiko Trans Co., Ltd.	399,000		4,150,145		3,495,872		(654,273	)	1.2
Operates port-harbor transport facilities
Trancom Co., Ltd.	76,800		2,317,518		3,319,158		1,001,640		1.1
Logistics services
Total Transportation and Warehousing			14,322,322		14,296,208		(26,114	)	4.9

Transportation Equipment
Nissin Kogyo Co., Ltd.	184,200		3,379,776		2,842,918		(536,858	)	1.0
Brake systems
Tachi-S Co., Ltd.	311,400		5,040,769		4,137,134		(903,635	)	1.4
Child transformation seats, seat components, and rotating units
Total Transportation Equipment			8,420,545		6,980,052		(1,440,493	)	2.4

Utilities
The Okinawa Electric Power Company, Incorporated*	151,700		5,255,293		4,773,374		(481,919	)	1.6
Thermal power
Total Utilities			5,255,293		4,773,374		(481,919	)	1.6

Wholesale Trade
Matsuda Sangyo Co., Ltd.*	382,000		4,744,616		4,225,493		(519,123	)	1.4
Wholesales precious metals, electronic materials, and food
Siix Corporation	323,700		4,368,194		5,544,078		1,175,884		1.9
Video, audio, and office equipment
Ryoden Trading Company, Ltd.	875,000		5,981,063		5,978,307		(2,756	)	2.0
Electronic components
Total Wholesale Trade			15,093,873		15,747,878		654,005		5.3

TOTAL INVESTMENTS IN JAPANESE EQUITY SECURITIES		$	177,802,882	$	175,123,898	$	(2,678,984	)	59.8

INVESTMENTS IN FOREIGN CURRENCY
Japanese Yen
Non- interest bearing account			3,887,142		3,659,129		(228,013	)	1.3
Total Investments In Foreign Securities		$	3,887,142	$	3,659,129	$	(228,013	)	1.3

TOTAL INVESTMENTS		$	181,690,024	$	178,783,027	$	(2,906,997	)	61.1

OTHER ASSETS LESS LIABILITIES, NET				$	112,937,022				38.9

NET ASSETS				$	291,720,049				100.0

Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost is $9,062,007.

Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value is $11,740,991.

* Non-Income Producing Security

The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of November 30, 2014.
Level 1 – quoted prices in active markets for identical investments.
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 – (including the Fund’s own assumptions in determining the fair value of investments).

Level	Investments in Securities

Level 1
Equity Securities	$	175,123,898
Foreign Currency	$	3,659,129
Level 2
Level 3
Total	$	178,783,027

During the quarter ended November 30, 2014, there were no transfers between Level 1 and 2 and the Fund did not hold any instruments which used
significant observable inputs (Level 3) in determining fair value.

Item 2. Controls and Procedures.

(a) The Registrant’s Principal Executive Officer and Principal Financial Officer evaluated the Registrant’s disclosure controls and procedures within 90 days of the filing of this report and concluded that they were effective in providing reasonable assurance that the information required to be disclosed by the Registrant in its reports or statements filed under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

(b) There were no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 3. Exhibits.

(a) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 are attached hereto as an exhibit.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

JAPAN SMALLER CAPITALIZATION FUND, INC.

By:	/s/ Yutaka Itabashi
	Yutaka Itabashi, President
	(Principal Executive Officer)

Date: January 29, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Yutaka Itabashi
	Yutaka Itabashi, President
	(Principal Executive Officer)

Date: January 29, 2015

By:	/s/ Amy J. Marose
	Amy J. Marose, Treasurer
	(Principal Financial Officer)

Date: January 29, 2015